A Business Application Summation

November 12, 2012  9:58 AM

Big data, Karl Rove and DrunkNateSilver prove a data quality point

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If you follow the same bloggers, tweeters and publications that I do, after last week you could be forgiven for looking forward to the next four years of the Nate Silver administration No one has probably done more for nerd-dom since Lewis Skolnick and Gilbert Lowell. Although the Harvard Business Review’s decision to nominate the data scientist as the sexiest job of the 21st century certainly did its part.

Still, is there a clearer sign of instant celebrity in the modern era than inspiring your own parody Twitter handle? @DrunkNate Silver is pretty funny (though a warning, it’s a bit bawdy if that bothers some folks).

It’s a good story, and a good headline, tied to one of the world’s biggest events, but I have to say I find much of it over the top. I saw one story claiming Nate Silver’s victory over punditry. I guess that makes sense if you think people watch pundits for actual election predictions. Karl Rove’s meltdown on election night over Ohio would indicate anyone looking for accurate predictions from these folks aren’t getting the measured analysis they hoped.

I’d argue that people watch pundits for entertainment, not measured analysis. Look, statistical analysis has penetrated the sports world pretty pervasively — far quicker than in a lot of business segments. After all, Billy Beane, the General Manager of the Oakland A’s, with no other business background is a member of the NetSuite board of directors. Silver himself started out by developing the PECOTA system, to predict baseball players’ hitting and pitching performance. But people are still listening to sports talk radio and they’re not discussing statistics. I live in Boston, believe me I know.

Another story in Slate threw a little cold water on the idea of Silver as a towering genius, and it makes a good point. Silver didn’t win the election, he just predicted it with incredible accuracy. And he did that using polling numbers that have been around for years. Obama won the election. With a great deal of help from his own number crunchers as this Time piece points out.

Political campaigns have long been at the forefront of data mining and predictive analysis. By most accounts, the Obama campaign has been particularly good at it. Stories about couples who voted early only to later get a phone call asking if their son had voted yet are a pretty good indication Obama’s campaign was well organized. That is something for business to strive for. I wish I could get through an IVR system without having to enter my account information three times.That makes headlines indicating that Silver provided some ‘big data’ lessons none too surprising. The fact that Silver got the election right and a bunch of right-leaning pundits got it wrong may be a vindication of big data for the enterprise, but I think it points to another lesson and that’s one of data quality.Silver’s trick wasn’t collecting election data and running it through a supercomputer. It was finding the right polls and weighting them according to accuracy, which seems to me much more about the quality of his data than a dive into big data analytics. Data quality has traditionally been given short shrift when popular technology trends like CRM and BI emerge only to rear its ugly head after the project has been rolled out. That is a lesson businesses would be wise to take from this election.

September 24, 2012  11:49 AM

Dreamforce reignites the CMO vs. CIO debate

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Last week, Salesforce.com released its plans for the Marketing Cloud, a new identity management offering and a Dropbox-like feature for the enterprise.

Yet, one item that garnered much of the attention at the annual Dreamforce user conference was IT analyst firm Gartner’s report that by 2017 the CMO will spend more on IT than the CIO. Salesforce.com CEO Marc Benioff mentioned it several times during the conference. In fact, Benioff thinks Gartner may be too conservative.

“Personally I think it’s going to happen faster than that,” Benioff said in a question and answer session with the press. “I think Gartner is maybe underestimating.”

That sentiment is not surprising given how much Salesforce.com spends on marketing itself, not to mention its recent acquisitions of BuddyMedia and Radian6. Still, it’s clear Benioff believes in the trend.

“In many ways the CMOs are becoming the number two officers in the company right behind the CEO,” he said. “They’re flying these expensive jet fighters and they need a cockpit and they don’t have that. We bought a billion dollars worth of companies to give it a go.”

But do others agree? Clearly there are doubts. Frank Scavo, of Constellation Research, voiced his skepticism on Twitter and found some fellow doubters. Barb Darrow at Gigaom ponders whether putting the CMO in charge of IT is really a good thing.

There certainly are some factors putting pressure on marketing departments to modernize and automate, trends Benioff was happy to note during his keynote address. For example, according to research firm IDC’s worldwide collaborative applications forecast for 2011 to 2015, there will be a 47% annual growth in spending on social networking. According to an IBM survey of CEOs, social networking was cited as the most important way to connect with customers, and companies are having 150 million conversations a day with customers on social networks.

GE, which has invested heavily in Salesforce.com and its Chatter collaboration tool, would seem to agree with Benioff and Gartner.

“It’s already happened,” Ian Forrest, vice president of marketing for GE Capital, said during the conference. “The way I look at it is the CIO and CTO had everything because they owned the systems, the platform, the business rules, the logic, everything. And if you look at it today, today all the business rules and logic sit with the marketing teams. I just think it’s a trend that’s going to continue because the business owner now doesn’t have the gate of IT to develop the customer.”

Forrest, a marketer with a budget of his own, doesn’t want to wait for IT anymore.

“Logically as a marketer, you’re going to be thinking: How do I go faster? How do we go deeper? And you’re going to be a lot more reactive because you don’t have to deal with IT,” he said.

 It’s not like Salesforce.com is alone in chasing this trend, of course. IBM is hoping to appeal to marketing departments after buying Unica, Coremetrics and Cognos. Oracle, for its part, spent a reported $300 million on Vitrue and more on Collective Intellect. You now can count Adobe among that crew as well.

Whether CMOs ultimately outspend CIOs or not, it’s clear IT needs to take notice. As Michael Hickins points out about Salesforce.com in the Wall Street Journal:

The company’s customers may end up paying a price for its success. Salesforce.com may be reducing the overall effectiveness of its services, as its emphatic outreach to executives outside the IT department threatens to cause a fracturing of IT services within organizations, reducing the potential effectiveness of each of those individual applications.

Salesforce, with its emphasis on social software, is also increasingly emerging as a potential threat to the influence of CIOs. The vendor is brazenly circumventing IT and speaking directly to CEOs and CMOs. Burberry CEO Angela Ahrendts, GE CEO Jeff Immelt and GE CMO Beth Comstock, all actively endorsed Salesforce during this week’s conference.

Benioff acknowledged the challenge his customers may face with the rapid releases during his Q&A session.

“This is probably more technology than customers can assimilate,” he said.

If they can, it’s going to take both the CIO and the CMO to make it happen.

June 7, 2012  8:39 AM

M2M: A tactical take on managing ‘big data’? Oracle, SAP and Salesforce take note

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It took Isilon, EMC’s big data storage division, three months of development and a price tag in the “high five figures” to integrate its own internal Salesforce.com customer service application with Axeda’s machine-to-machine (M2M) application.

But it’s been worth it, according to Jason DePardo, director of technical support at Isilon.

DePardo outlined the project at a session during the Axeda Connexion conference being held in Cambridge, Mass. this week. (Axeda’s decision to misspell connection in its signature event remains one of those corporate branding moves I will never quite understand). The event lured me, as well as a number of local industry analysts — some of whom elected to skip to the SuccessFactors conference on the other coast — to Cambridge to see what’s happening in the world of M2M. We weren’t the only ones intrigued, so were SAP, Oracle and Salesforce.com, who are among the sponsors and presenters at the event.

The promise of enterprise applications and big data is an intriguing one and M2M certainly has a place in that conversation. According to Axeda CEO Jack Sweeney, M2M is on track to make 3.5 billion connections by 2015 and 15 billion by 2020. There was however, refreshingly little use of the overhyped “big data” term at the event.

Instead there was some concrete discussion of bringing M2M data into business applications. EMC’s Isilon, for example, is using Axeda to send product information directly from their customer’s storage arrays into support cases in Salesforce.com. 

In the midst of rapid growth before it was acquired by EMC in 2010 for $2.5 billion, Isilon saw its business expand even faster once the deal went through. Its caseload jumped from 3,000 support cases per month in January of 2011 to 6,000 cases per month a year later.

To cope with the onslaught, Isilon launched SupportIQ, a free product for its customers using Axeda’s M2M technology.

Prior to the initiative, support cases could take up to days to even get started. Isilon ships out a proprietary hardware and operating system in its storage arrays. Yet once it’s shipped, the company didn’t know how the customer had configured the array, how many nodes they had and other details relevant to solving a customer’s issue. When an issue arose, customers would have to discuss their configuration and run diagnostic scripts for Isilon’s support engineers.

Sometimes those requests would come in after the customer contact had left for the day. Then the diagnostic upload might fail the next day. It could sometimes be two days before support techs even began looking at the problem. Plus, when customers called back a few months later with a new support ticket, they’d have to repeat all their information again.

With the Axeda-Salesforce integration, support engineers can run those diagnostic scripts right from a button within Salesforce.

“The M2M technology has taken the process of starting the support case from hours, possibly days to literally how long it takes to run the script,” DePardo said. “We’re not constantly asking them, ‘hey can you run this command for us.'”

While the Salesforce-Axeda integration was a customer service initiative, it’s had an impact on sales as well. For example, one of the alerts M2M forwards to Isilon is when a customer reaches 80% of their storage capacity. Right now there’s no formal process for taking action on that information, support just forwards it onto sales, but that’s something Isilon is investigating.

“When we sell to a new customer almost undoubtedly their data needs grow and they are a follow on customer for us,” DePardo said. “If they had a good support experience it makes the sales easy.”

To date, Isilon has about 30% of its install base running SupportIQ, though 50% have the ability to enable SupportIQ.

“Some choose not to for security purposes or more than likely it’s an education process,” DePardo said, adding that one summer project for the interns at the company is to call Isilon’s customer base to educate them about SupportIQ.

In the meantime, Isilon has been able to handle the influx of support cases without adding significant headcount and hopes to further decrease the time it takes to close out a ticket by adding features like the ability to gather data on the node configuration from within Salesforce.com.

Of course, not all projects go that easily. I spoke with one Axeda customer at lunch who asked not to be named. They’ve put their M2M project on hold for an issue familiar to anyone running enterprise applications – they’re data was so dirty that the insights they got couldn’t be acted upon. Multiple names on one customer account or outdated information meant the machine data coming into their ERP system couldn’t be addressed.

There was a fair amount of excitement around M2M, particularly from Emily Nagle Green, chairman emeritus of The Yankee Group and the keynote speaker at the show, who sees M2M as more than just machines but connecting to things – everyday things. She discusses that in the video below.

Yet, as exciting as things like big data and M2M may be you still need to do the dirty work, as in cleaning your dirty data.

May 21, 2012  4:28 PM

Is SAP leaving ERP behind?

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In-memory! Cloud! Mobile!

There’s no question what the dominant themes were at last week’s Sapphire conference. They were writ large across the Orange County Convention Center and repeated mantra-like from the keynote stage.

Far less time was spent addressing SAP’s core ERP business. In fact, when key executives did discuss “the core” it was to explain how they were not going to change it or disrupt their customer base.

Hasso Platner SAP

Hasso Plattner, SAP Executive Board member, said in-memory is different for OLTP and OLAP. (Image courtesy SAP)

That stands to reason, of course. Most industry observers will tell you that cloud, mobile and — maybe not in-memory, but certainly analytics and faster analytics, the core value proposition for HANA — are the key trends moving forward. A show like SapphireNow, is typically for roadmaps and grand vision.

Besides, co-CEO Jim Hagemann Snabbe did offer a few promises for enhancements to SAP’s core ERP suite.

“We’ll pay special attention to a new user experience for the business suite,” he said during his keynote address. “It’s time we get modern with interaction for our users, creating intuitive and consumer-like experiences.”

Yet, a few statements from SAP’s senior leadership should certainly have SAP customers questioning what happens to the core ERP product while SAP is focused on in-memory, cloud and mobile.

Take co-CEO Jim McDermott’s statement from the post keynote QandA with press and analysts:

“On the implementation and ready-to-run Rapid Deployment Solutions, we view the partners consuming much more of the standard ERP business of SAP,” he said. “Much more of that business will go to the partners. Their networks are more suited for that. We want to focus on mobile, in-memory, analytics and the cloud. We want to move our best people to these high value solutions and then teach the ecosystem what we do and how we do it.”

Those looking for help from SAP with the Business Suite had better get friendly with their partner instead.

In fact, Snabbe and McDermott both made the case for cloud applications being fundamentally different from on-premise. While that’s partly a shot at Oracle and it’s either/or Fusion Application strategy, it also paves the way for a new wave of applications, led by SuccessFactors CEO Lars Dalgaard.

“I think it’s a fundamental mistake to take an application designed for on premise consumption and just move it to the cloud,” Snabbe said. “It will not give you the opportunity to scale and be profitable in the cloud. It’s the easiest way to be fast to the cloud, but it’s not going to bring you a successful business.”

Indeed, Snabbe essentially dismissed a question from Foote Partners’ David Foote, who said his research showed that pay for those with SAP skills tanked in the last quarter.

“The number of people deploying ERP is not going to increase rapidly,” Snabbe replied. “Analytics is still growing rapidly, so is the cloud. Maybe it’s more about defining SAP in its new categories when you look at the total need for skills, not just ERP. Those skills are rare and we are doing everything we can to expand the skills in those roles.”

SAP’s co-founder, Hasso Plattner, who has been laser-focussed on HANA for years, also gave a clue about the future of application development at SAP.

“We can write applications that are fundamentally different than the ones we have,” he said. “SAP is not continuing to grind away on what we did 15 years ago.”

In a highly technical address, Plattner explained that SAP’s HANA in-memory technology can bring massive enhancements to OLAP that do not carry over to the same extent for OLTP.

“The difference is OLTP systems do single selects, mostly single selects, and OLAP systems do group selects,” he said. “Single selects you cannot make much faster. Any database with a decent cache is doing this today. We cannot make it much faster. That is why OLTP can only be made faster to a certain degree.”

Clearly, new analytical applications running on HANA, mobile and in the cloud — likely all at once — are the direction SAP is headed.

Of course, this does not mean the company is abandoning its core customers and all the revenue they provide. In fact, Plattner made that very case. He promised SAP would not build separate Business Suite functionality for HANA.

It does, however, provide some guidance on where SAP is headed and who’s handling and innovating on the Business Suite moving forward.

May 16, 2012  8:09 AM

SAP’s cloud chief slams Business ByDesign approach, poses cloud alternative

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SAP outlined its cloud plans Tuesday and there is perhaps no greater indication of the shift in strategy – and culture – than the attitudes of its newest executive board member toward Business ByDesign.

Lars Dalgaard, CEO of SuccessFactors, said this of SAP’s flagship SaaS offering during a question and answer session with press and analysts:

“Business ByDesign is a powerhouse, it just is,” he said. “But it hasn’t been marketed right, it hasn’t been positioned right or explained right and people haven’t been trained right. There isn’t much I can say that’s been done right.”

Dalgaard intends to change that. Pundits at the SapphireNow show here in Orlando are wondering how he’s going to change the culture as well. He’s taken up the customer mantra of co-CEOs Jim Hagemann Snabe and Bill McDermott.

“At SAP we’ve had too much PhD and too little customer,” Dalgaard said.

Business ByDesign will still be a sold as a suite to SMBs and divisions of larger enterprises, but the future of cloud applications at SAP is a modular one.

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Lars Dalgaard at SapphireNow Courtesy SAP

In his keynote address at Sapphire, Dalgaard identified a four-prong approach to selling cloud apps: customers, people, money, suppliers.

The customer-focused cloud applications are already out with an upgrade to Sales OnDemand and the availability of a new social media tool (or the SAP Social Customer Engagement OnDemand solution if you’re, you know, not into the whole brevity thing). The people applications will be based mostly on SuccessFactors’ human capital management portfolio and was highlighted by the release today of a version of SAP’s cloud-based payroll system that integrates with SuccesFactor’s Employee Central. Supplier applications will be built off of SAP’s Sourcing OnDemand.

And the money applications?

Those will be based on existing work done by the Business ByDesign team, as well as new work being done by the developers at SAP who brought you R/3 and by developers at SuccessFactors, according to Dalgaard.

“It’s SAP’s God-given right to build financials in the cloud,” Dalgaard said. “It’s a very serious, very deep product. It’s a tiger in a cage. Today we let it out.”

The core difference is that unlike Business ByDesign, SAP’s cloud applications will be sold individually. That, Dalgaard said, is the way people buy clouds.

“They wanted to boil the ocean,” Dalgaard said. “The market wasn’t ready for a boiled ocean.”

 If that sounds familiar, that’s because SAP had already started down that path with Career OnDemand, Sales OnDemand and Travel OnDemand. It’s also the approach Oracle has taken with its Fusion Applications.

The link there is John Wookey, who in the merry-go-round of Silicon Valley, was head of development for Fusion Apps before moving to SAP to help build the OnDemand apps there, and is now at Salesforce.com, heading up application development. It will be interesting to see what comes from Salesforce.com two years from now when Wookey has moved on again.

Dalgaard vowed to continue to invest in Business ByDesign, but made it very clear that if it, or any other platform doesn’t perform, he’s ready to throw it out.

“If it’s not working, it’s gone,” he said. “I’m the first one to call out where the problems I find are.”

Given SAP’s checkered history with ByDesign, or its first OnDemand CRM applications for that matter, the market awaits the outcome.

April 12, 2012  2:52 PM

Can SAP keep its promises of database dominance?

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You can say this for SAP: It doesn’t lack confidence.

Its track record of living up to lofty promises, however, is a bit spotty.

The company basically laid it all out on the table this week when it proclaimed its intention to take over the database market. During the press conference detailing its many initiatives — of which database dominance was only a part — CTO Vishal SIkka promised that SAP would become the fastest growing database vendor in the industry. Of course, that’s not much of a claim considering where SAP’s database business was two years ago. Are they factoring in the Sybase business in that growth model?

SAP has been a little more boastful about its database ambitions recently. At an analyst event in Boston last winter, it promised to be “the number two database vendor by 2015.”

The question remains whether SAP can pull that off.

SAP’s press conference put me in mind of a recent post from Tom Wailgum over at ASUGnews who did some nice reporting by digging through SAP’s year-end Form 20-F document.

Among the interesting nuggets:

“We want to become a profitable market leader in cloud computing, generating $2.6 billion in revenue in this segment by 2015.” (No. 7)

So, by 2015 SAP aims to be the No. 2 database vendor and a market leader in cloud computing with $2.6 billion in revenue. Those are lofty goals and lofty goals are good, but what is SAP’s track record in keeping its promises?

Well, in 2006 SAP’s then-CEO Henning Kagermann said that by 2010, two-thirds of the installed base would be using enterprise SOA. “Using enterprise SOA” is a tough one to define so we’ll pass there.

How about in 2007, when SAP vowed to have 100,000 customers by 2010? That claim was made largely in hopes that Business ByDesign would pump up the SMB user base. In fact, SAP also pledged that Business ByDesign would bring in $1 billion by 2010. SAP ultimately fell short, scaling back on Business ByDesign as it ran into bugs and issues making it profitable enough. And the customer numbers?

Based on the Form 20-F, SAP now has 183,000 customers.

SAP actually put forth a lot of goals for 2010. In 2008, then CEO Leo Apotheker said “all customers will have upgraded to ERP 6.0 or the latest Business Suite releases.”

That one didn’t work out so well. According to the SearchSAP.com 2010 Reader Survey, 48% of respondents were still on R/3. By the 2012 survey, two years after Apotheker’s target date, the number has improved. Sixty-six percent of respondents had moved to ERP 6.0, 18% were still on R/3 4.7 or earlier and 12% were on ERP 5.0.

For most customers, whether SAP winds up the No. 1, No.2 or No. 6 database vendor probably doesn’t matter a whole lot, as long as they get the kind of response times and value that SAP is promising with HANA. Similarly, whether SAP becomes the “fastest growing” database vendor probably doesn’t matter a whole lot to SAP customers either, outside of the dollars many of them will be contributing to make that happen.

Still, it’s always good to bring some perspective to boastful software executives.

February 14, 2012  4:01 PM

Microsoft preps cloud ERP, adds to its own SAP deployment, ponders HR

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Microsoft applications executives are out on the road this month, getting word out ahead of the company’s Convergence business applications show in Houston in March.

The word, apparently, is cloud.

Microsoft is scheduled to release its first ERP product for the cloud this year with Dynamics NAV. It will be followed by the company’s other ERP products in the Dynamics line — AX and GP.

Mike Ehrenberg, a Microsoft technical fellow, explained the company’s approach to cloud ERP in a visit to TechTarget’s offices last week. As with CRM, Microsoft will offer one code base, but with the ability to deploy it on-premises, partner-hosted and Microsoft-hosted.

According to Ehrenberg, when it comes to ERP, choice is even more important than it is with CRM.

“SMBs prefer to deal with partners, enterprises want to deal directly with Microsoft,” he said.

Additionally, any company moving to ERP in the cloud will have to do so carefully. Microsoft for its own part is developing AX in key areas for its own business operations. The company runs SAP, but is “extending AX around the edges,” Ehrenberg said, building an expense management system.

“Horizontal workloads need that sort of approach,” he said. “You’re in a better position to deal with change. We’ll go after one functional area at a time.”

Moreover, re-architecting Microsoft’s suite of ERP applications from premises-based software, to software that can run in multiple environments is one the company is ready for thanks to its experience with Dynamics CRM, which was initially developed as an on-premises-only application.

“We’ve been down this road before,” Ehrenberg said. “Now, CRM was before Azure. On ERP it’s more important to go on Azure first.”

Of course, Microsoft has not ported its CRM product over to the Azure platform yet either.

Ultimately, Microsoft’s Azure ID module will allow users to access Office 365 and CRM, as well as federate the cloud with on-premises deployments.

“We live in a cross-platform world,” Ehrenberg said.

Microsoft’s cloud initiatives will also be multitenant. However, it’s not a customer concern so much as an analyst and reporter concern, according to Ehrenberg.

“The only time someone asks us if we’re multitenant is if someone tells them to,” he said, calling multitenancy “a grossly misunderstood topic.”

That may be changing. In a recent story on cloud-integration, SearchDataManagement Senior News Editor Mark Brunelli spoke with the American Automobile Association of Northern California, Nevada and Utah’s (AAA NCNU) application integration head, who insisted on multitenancy in his cloud integration platform. From Brunelli’s story:

AAA NCNU wanted a “truly multi-tenant” cloud-based integration tool-a single version of the application that serves multiple clients-but IBM Cast Iron and Jitterbit didn’t fit the bill, according to Kirk Heughens, the auto club’s application integration leader.

“We were looking for a true cloud offering,” Heughens said. “A lot of vendors nowadays say they are cloud [but actually] have multiple installations of their software out there in the cloud, so it’s really not truly multi-tenant.”

Most customers may not be concerned with multitenancy but they’re definitely interested in what it may mean for them — lower costs through economies of scale and quick and easy deployments.

Microsoft can provide those things and in fact is already pushing heavily on price in the CRM market, under pricing Salesforce.com with Dynamics CRM Online.

In fact, Azure will change the game by redifining tenancy, for example multiple tenants at the operating system level, Ehrenberg said.

“We’re going to do things differently,” he said.

Microsoft sits out the cloud HR buying spree

Meanwhile, Microsoft’s competitors in the enterprise marketplace are making big investments in the cloud and human resources with SAP’s $3.9 billion acquisition of SuccessFactors and Oracle’s $1.9 billion acquisition of Taleo.

“The prices are stunning. We certainly looked at those things,” Ehrenberg said, noting that the two companies will have a lot of integration work ahead of them. “Over time you have to have a common architecture. It’s important [the applications] talk to one another.”

Cross platform, cross device

Microsoft is also promoting the fact that its applications will run across devices and operating systems. It’s already previewed the Dynamics CRM release which will run on iPhone, iPad, Android, Windows and BlackBerry devices and on Windows, iOS, OSX, Android as well as  Firefox, Safari and Chrome in addition to Internet Explorer.

“The best experience will be on Windows,” Ehrenberg said. “We’ll be good on the others.”

February 1, 2012  11:39 AM

SaaS dominates the cloud

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Despite the hype around private clouds, Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), most organizations are focused squarely on Software as a Service (SaaS) — if they’re in the cloud at all.

Results from the TechTarget 2012 IT Priorities survey indicate that SaaS is the predominant use for cloud computing – by a long shot.

Of the respondents using cloud computing in 2012, 55% are using Software as a Service, far outdistancing Storage as a Service, the next highest response at 35%. For comparison, 31% had plans for IaaS, 28% plans for disaster recovery/business continuity in the cloud, 27% for PaaS, and 21% had plans for hybrid cloud integration.

The online survey polled 2,642 global respondents, 1,308 in North America, at the end of 2011.

Rick Hassman, director of applications with Pella Corp., the Pella, Iowa window manufacturer, is among those who have stepped into the cloud with SaaS. Running some applications in the cloud via the SaaS model made perfect sense, but moving other core IT functions there — well that he’s not so sure about.

Pella, an Oracle applications shop, runs the E-Business Suite as its core ERP with the SaaS-based CRM OnDemand product in some sales groups and Oracle CRM in another.

“Based on the investment we’ve put into the infrastructure, the network, the redundancy, the disaster recovery, I would say our core strategy moving forward would still be to host this stuff [ourselves],” Hassman said.  But CRM made sense because, in Pella’s case, it’s not heavily transactional and most of its users are remote. “We felt we could integrate it and we didn’t have the inherent skill set in house.”

Pella is far from alone in this thinking.

The TechTarget 2012 IT priorities survey showed SaaS is becoming more pervasive throughout the enterprise. On-premises software/hardware and on-premises appliances remain the primary deployment models at 58% and 23% respectively, but 35% of respondents said they would use a SaaS deplyoment model in 2012. Only 16% planned to run their software on a public cloud infrastructure and 26% had plans to run their software on a private cloud. Just 17% had plans for mobile deployments in 2012.

Of those SaaS adopters, 57% said that the end user population will be using one or more cloud apps next year. Additionally, roughly a third said that as much as 40% of their end user population or more will use cloud apps this year.

Other research has shown that the spending is following SaaS. According to Gartner, vendors with SaaS models for enterprise applications brought in $9.2 billion in 2011-that’s up 16% percent from 2009 when Gartner sized the market at $7.9 billion. Additionally, momentum shows no signs of slowing as SaaS and cloud continued to converge in 2011. Gartner predicts a more than 16% growth rate for 2011 with SaaS revenue to hit $10.7 billion.

SaaS’s dominance of cloud computing is not particularly surprising given its maturity relative to other approaches like IaaS and PaaS. It can serve as a gateway to other cloud-based initiatives, according to Jeff Kaplan, managing principal at THINKStrategies, a Wellesley, Mass.-based consultancy.

“It’s the success of SaaS that opened the door to the broader idea of cloud computing,” he said.

Looking at the evolution of SaaS, it was typically brought into an organization by a renegade user, like a sales manager who bought a few seats of Salesforce.com, or some other sort of productivity-oriented application, Kaplan said. Once they found success, SaaS often found its way into the rest of the organization, with users looking at front and back office tools. From there, organizations often began thinking of other cloud-based applications that meet their industry requirements.

“Then IT takes a look and says, ‘maybe we can get them to work for us as well,'” Kaplan said. “That’s where storage as a service and infrastructure as a service comes in.”

A company’s size, age and infrastructure clearly play a part in their willingness to adopt SaaS or other cloud technologies. As Hassman mentioned, Pella has to consider the investments it’s already made in infrastructure.

“The more established companies who have a tremendous amount invested in infrastructure are less inclined to give those up and migrate over to a SaaS app unless they feel confident they can do it with little pain,” Kaplan said.

While its CRM OnDemand deployment has helped Pella prepare itself for the idea of other cloud initiatives, SaaS is no panacea.

December 5, 2011  7:24 PM

Is the business applications market coming down to Salesforce, Oracle and SAP?

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Recent events suggest that Oracle, SAP and Salesforce.com will soon be all that’s left of the enterprise software vendors – at least when it comes to the cloud.

An examination of recent announcements from the three demonstrates that the business applications giants are investing heavily in the cloud and competitors better watch out.

Current and potential customers of SAP, Oracle or Salesforce should be also concerned because consolidation is seldom a good thing for buyers.

After the last several weeks, it certainly looks like these three vendors will be the ones reigning over applications in the cloud. We start with Oracle.

Oracle acquires RightNow

Oracle has gobbled up plenty of cloud-based application vendors over the years (and plenty of other vendors as well) but its acquisition of RightNow brought a competitor of Salesforce.com’s Service Cloud in-house.  The addition of the customer service offering also served to help round out Oracle’s cloud-based CRM portfolio.

 Competition aside, what’s also interesting is that RightNow’s architecture is not, by most definitions multi-tenant. As Oracle moves its Fusion Applications — and subsequent acquisitions to the cloud — it’s clear it’s focused on virtualization as the underlying architecture and not multi-tenancy. Why does that matter to enterprise software buyers? In general multi-tenancy creates economies of scale, at least some of which get passed on to customers. Oracle does not seem interested in that.

Salesforce.com releases the Social Marketing Cloud

Perhaps the most interesting tidbit from Salesforce.com’s Cloudforce event in New York last week was CEO Marc Benioff’s aside during a press QandA about Oracle, multitenancy and their product line. Benioff, taking great pleasure in tweaking his rival in Redmond Shores, pointed to a fundamental difference in the competitors’ approaches to cloud computing.

“We heard this week– now this is just something I heard — that Oracle is discontinuing Oracle CRM OnDemand and shutting down that organization and that sales force and moving everyone onto Fusion, which is not a multi-tenant system,” he said.

Meanwhile, Benioff continued to preach the gospel of the social enterprise with the release of the Social Marketing Cloud (Paul Greenberg has a pretty good critique of the strategy). That line of business is based on Salesforce.com’s acquisition of Radian6, a onetime independent cloud vendor. In fact, Salesforce.com has bought up more than a few independent SaaS vendors to add to its suite. That’s likely the fate for many rising SaaS companies– getting acquired by one of the new big three.

Which brings us to…

SAP to buy SuccesFactors for $3.4 billion

Compared to SAP’s acquisition of BusinessObjects for $6.8 billion, the purchase of on demand talent management software SuccessFactors over the weekend seems not nearly as big a deal. But as co-CEO Bill McDermott said on the call with reporters, “we will become the No. 1 business software company in the world in the cloud. It’s only a question of what year.”

Clearly the race is on to move existing apps to the cloud (Fusion Apps); build new ones (Salesforce.com’s Chatter, SAP’s Business ByDesign); buy up what’s already doing well (RightNow, SuccessFactors); and stake out positions (multi-tenant vs. single tenant). And, as Oracle and SAP are seeking to become more like Salesforce.com, Salesforce.com is doing its part to be more like premise-based enterprise software, offering an enterprise license agreement and a database residency option for customers that absolutely, positively can’t let some data leave their home.

What about the others?

Of course, those three are not the only companies selling enterprise software.

I suppose apologies are due to Microsoft, which has a competitive cloud-based CRM offering and is scheduled to release its Dynamics NAV ERP application on SQL Azure  in 2012. But in July, there was plenty of concern that Azure is not ready to run ERP and NAV is a newer, more Web-enabled application. Moving Dynamics GP (Great Plains) and AX (Axapta) and their client-server code bases could prove a more daunting challenge. We’ll hold off on Microsoft.

(UPDATE: one day after publishing this post, Josh Greenberg at EAC made a pretty good case for Microsoft joining this list thanks to some cross-company synergies)

What about Infor? Judging from Infor CEO (and former Oracle CEO) Charles Phillips’ appearance with Benioff in New York, it’s clear the Salesforce.com platform is their cloud platform of choice while Infor services its existing premises-based customers itself.

Bottom line for buyers?

What does that mean for enterprise software buyers in the long run? Buying cloud-based apps means savings on hardware and maintenance and, while calculations differ, generally appears cheaper on a per user basis. How long will that last? Doug Henschen at InformationWeek lays it out pretty explicitly in his coverage of the SAP news:

What’s more, cloud apps vendors earn notoriously slim margins. SAP had to reassure financial analysts that cost synergies and growing scale driven by cross selling would improve SuccessFactor’s profit picture. The company lost $12.5 million on $205.9 million in revenue last year.

As Oracle, SAP and Salesforce increasingly compete with packaged cloud applications, they as well as a host of other companies are also pushing hard on the PaaS front, bringing a new dimension to the ages-old build vs. buy dilemma.

Think another vendor should be included? Make your case below.

October 26, 2011  10:22 AM

Oracle-RightNow: Expert reactions and the future of the Cloud Services Agreement

Barney Beal Barney Beal Profile: Barney Beal

There’s been no shortage of takes on Oracle’s acquisition of RightNow Technologies.

Opinions about the motivation and the market impact run the gamut.

Mike Fauscette sees it as way for Oracle to bolster its recently-released Public Cloud initiative.

He writes:

Oracle’s Public Cloud offering, up to this announcement, was presumed to be composed of existing Oracle products including Fusion Applications, but clearly now Oracle plans a more aggressive move into the SaaS apps space.

R Wang sees some merit to that rationale, but cautions that RightNow, not being truly multi-tenant and therefore not truly SaaS, will require Oracle to deliver a multi-tenant version of Fusion Middleware. And, like many others, Wang saw the move as partly a competitive play against Salesforce.com, but also a longer-term customer experience management move. RightNow has for years given up calling itself CRM and instead focused on branding itself as customer experience management technology.

Wang writes:

Social business, online experience optimization, and gamification represent huge holes in Oracle’s product portfolio.  RightNow brings tremendous amounts of thought leadership to the table should Oracle retain the product teams.  More importantly, the SMB focus will help Oracle bring in a new customer base.

Phil Wainwright, on the other hand, rejects the idea that Oracle bought RightNow as a reaction to Salesforce.com’s acquisition of Assistly. He sees it as Oracle buying up the SaaS old guard, and offers a lengthy and well-documented take on the multi-tenancy vs. SaaS argument.

Wainwright writes:

The choice of RightNow sends further signals about the kind of cloud vendor Oracle will prefer to acquire. Over the years, RightNow has had more than a few critics of its SaaS model, which has been much closer to Oracle’s notion of hosting customers in clustered ‘pods’ of servers than more purist definitions of multi-tenancy (of which there are many). RightNow’s variety of SaaS model is more prevalent than you’d believe from listening to the hype that comes from the industry. There are large numbers of vendors with similar architectures, and it’s a tough path they’ve chosen. As time goes on, I suspect they’ll find it harder and harder to compete against more technologically and economically agile vendors that more effectively leverage true cloud architectures.

Meanwhile, Beagle Research’s Denis Pombriant offers a similar reaction to Wang’s, seeing the long-term potential for customer experience management.

Pombriant writes:

Seriously though, Oracle, ATG and RightNow might be a thing in the future.  Multi-channel communication combined with e-commerce outreach could be very important.  Add to this Oracle’s success in what it has called clienteling (sp?) in which store sales associates carry mobile devices that can orchestrate customer centric shopping, and you might see a pattern.  If the customer can’t come to the store, perhaps the store will come to the customer.

The ATG connection is an interesting one. It got relatively little attention in the marketplace when it happened and Oracle’s CRM executives have cited it repeatedly as a differentiator. Seen through the lens of IBM’s Smarter Commerce push, in which IBM is combining its own acquisitions of Sterling Commerce, Unica, Coremetrics and SPSS, software buyers might actually have the luxury of pitting Oracle against IBM once again.

Forrester’s Kate Leggett wonders how Oracle will rectify all the overlapping functionality.

She writes:

Oracle has many overlapping and competing assets for CRM and customer service as well as for point solutions (e.g., email, chat, and knowledge management). Oracle must position RightNow as a unique offering in its current solution portfolio and must clearly message and steer customers to the right solution for their particular business need (for example, if I am a customer needing knowledge management, do I buy InQuira from Oracle or RightNow from Oracle? What about a chat solution? Do I buy InstantService from ATG/Oracle or from RightNow or the Oracle product?).

 Of course people were posing those same questions about PeopleSoft CRM, and Siebel. The answers remain elusive. 

Leggett raised another interesting dilemma, that of clashing corporate culture. Normally, I wouldn’t put much stock clashing cultures. They’re part of acquisitions, people meld or move on, sometimes the acquiring company changes up. Yet in this instance, the two companies could not be more different — at least based on public perception.

What I wonder is, what happens to the RightNow Cloud Services Agreement? Think Oracle will continue with sales based on a three-year price commitment plus a three-year renewal price cap? What about “pools of capacity” similar to wireless rollover minutes? Ramping licenses up based on seasonal demand?

One need only to look at Mark Fontecchio’s reporting on SearchOracle.com to see questions about Oracle’s commitment to support, Oracle’s tactics when it comes to license audits, or its less-than-customer-friendly contract negotiation practices to find the likely answer to those questions.

Perhaps one of the most interesting revelations in the wake of the acquisition is the re-surfacing of an October 2010 interview with RightNow CEO Greg Gianforte on BusinessCloud9. It seems Gianforte had his own issues with Oracle licensing.

“Let me tell you about Oracle,” says Gianforte. “We needed a new accounting system. The one we had was at end of life so we set out to procure a new one. There are really not that many options out there. That German company that makes accounting systems was probably too big for us, so we had a shortlist of Oracle and NetSuite. Now I didn’t trust Oracle as far as I could throw a stick! We try to keep our data centres an Oracle-free environment.”

In fact, RightNow had purchased some Oracle software the previous year, he recalled, but found that in order to scale,  it was necessary to put it onto 30 servers. That resulted in a visit from Oracle’s compliance people clutching a multi-million dollar tab. In the end RightNow settled for a lower rate of $250,000, but winning price certainty was a pre-requisite for this new accounting system.

As Rosemary Cafasso, reporting from the RightNow user conference is already discovering, many RightNow customers are nervous about their new software provider.

And from the take it for what it’s worth department:

There’s a major snowstorm in Colorado Springs at this moment.

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